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WEDNESDAY, October 05, 2022
Trump orders Chinese company to divest ownership of U.S. firm, citing national security concerns

Trump orders Chinese company to divest ownership of U.S. firm, citing national security concerns

SATURDAY, March 07, 2020

WASHINGTON - President Donald Trump on Friday ordered a Chinese company to divest all ownership of a U.S. hotel-software company, saying the Beijing investor could harm U.S. national security.

A written order from the president's office suggested the administration is concerned about Chinese access to StayNTouch's hotel-guest data. The order gave Beijing Shiji Information Technology 120 days to divest all interests in the company.

The rare order is another sign of the Trump administration's increasing scrutiny of Chinese influence in the U.S. economy. Congress has also taken a tougher stance, including through 2018 legislation that gave the executive branch new powers to reject foreign investments in American companies if they affected national security.

In Friday's order, Trump said there was "credible evidence" that the Chinese company "might take action that threatens to impair the national security of the United States."

The document ordered the Chinese company to immediately refrain from accessing any of StayNTouch's hotel-guest data.

"The purchaser shall ensure that controls are in place to prevent any such data access until such time as the divestment has been completed and verified," the order says.

Beijing Shiji is part of Shiji Group, which sells software for the hotel, food service, retail and entertainment industries. The Chinese company acquired StayNTouch in 2018, saying the U.S. company's software allowed hotel employees to "exceed guest expectations." It said the software was used in connection with 90,000 hotel rooms globally.

Beijing Shiji said it was "disappointed" by the White House order.

"We believe President Trump's decision was incorrect. Shiji is not a threat to U.S. security in any way. The U.S. government did not adequately explain the basis of its decision to us. In fact, Shiji does not access the guest data of StayNTouch Inc.'s customers," the company said by email.

"We offered a range of significant proposals to mitigate any concerns the U.S. government might have, including further restricting access to guest data and appointing an independent monitor to ensure these protections. Unfortunately, those offers were rebuffed," the email said.

Trump's order follows a review by the Committee on Foreign Investment in the United States, or CFIUS, an interagency committee whose powers were strengthened by the 2018 legislation. CFIUS recommends to the president whether certain proposed takeovers should be rejected, and whether completed takeovers should be reversed, on national security grounds.

In 2018, after a CFIUS review, Trump ordered Singapore-based Broadcom to abandon its $117 billion bid for the U.S. semiconductor company Qualcomm, blocking what would have been one of the biggest technology deals in history.

In October, Sen. Marco Rubio, R-Fla., asked CFIUS to open a probe into a merger that led a Chinese investor to own TikTok, the popular social-media app. Rubio said he was concerned the Chinese investor, ByteDance, was "censoring content" around the world to satisfy Beijing's leaders.

CFIUS opened a probe in November.